Hedge Funds Outbid In Federal Bitcoin Auction

Jul 1 2014 | 8:26am ET

Hedge fund Pantera Capital Management went bargain-hunting at the U.S. Marshals Service bitcoin auction Friday, and came up empty-handed.

Pantera, which has become one of the most prominent bitcoin investors, said that the sale of the nearly 30,000 bitcoins—seized from online marketplace Silk Road—had the opposite of its expected effect, increasing demand for the virtual currency rather than sending its exchange price down.

“The U.S. government auction created a tremendous amount of new demand for bitcoin,” Pantera’s Dan Morehead told The New York Times. “Most of the people we spoke to were new entrants to the bitcoin market. None of our bids were hit. I think it went at quite a high price.”

The Marshalls said that 45 bidders had participated in the auction, with 63 bids received for the 10 3,000-bitcoin lots. The service had begun notifying winners, but has not identified them publicly.

Prior to the 12-hour auction, Pantera was widely seen as a favorite to come away with some of Silk Road’s bitcoins.

Pantera wasn’t the only hedge fund to bid. Rangeley Capital also made an offer, also below market price, and was also outbid, co-founder Chris DeMuth told the Times.

“It’s more about the process and the potential for the price than it is anything intrinsic to bitcoins,” DeMuth told the newspaper.


In Depth

Steinbrugge: Will Hedge Funds Help or Hurt During the Next Market Correction?

Sep 7 2016 | 11:55pm ET

Most investors have become accustomed to quick rebounds when markets correct, but...

Lifestyle

Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...